A new reinsurance company will be set up in Bermuda with capital of $125 million, it was revealed yesterday.

A leading Japanese insurance business, Tokio Marine and Fire Insurance Company Ltd., said yesterday it was about to set up Tokio Millennium Re Ltd. in Bermuda. The company will start business at the beginning of April this year, and will compete with other reinsurance companies already on the Island.

Tokio Millennium Re Ltd. is a Class 3 reinsurance company and will become the group's largest subsidiary second only to the life operation of Tokio Anshin Life Insurance Company.

Tokio Marine said it chose to move to Bermuda because it saw the Island as being at the forefront of innovative transactions. And it viewed the Island as a location with sophisticated risk assessment technology.

The move is a new departure for the Japanese company which is globalising its business. It is now moving into global risk management with a focus on natural catastrophe risks and integrated products. The Bermuda subsidiary is just part of the globalisation of Tokio Marine which also includes the opening of a new products development advisory unit in New York and its Tokyo head office.

The Bermuda company will be part of an integrated risk management system which aims to expand the portfolio for the whole Tokio Marine group.

The parent company says that the new Bermuda company completely differs from all other reinsurance operations of the Tokio Marine group because its primary mission is not to earn a profit through assumed reinsurance but to use reinsurance as a tool to make effective use of its capital.

The new Bermuda company will be run by Chief Executive Officer, Shin-ichiro Okada. Mr. Okada has extensive experience of over 20 years in the reinsurance field. His second in command is Chief Underwriting Officer Tatsuhiko Hoshina who also has a long history in the international reinsurance field.

The new company will assume non-Japanese natural catastrophe risks by way of reinsurance exchange. Tokio Marine will use its own in-house tools to analyse Japanese risks at the new Bermuda-based subsidiary.

Tokio Millennium Re is to seek a top group rating (AAA) from Standard & Poor's.